Mitterrand, Chirac hammer out accord for rule of France. President to run foreign policy, premier to run domestic side

After two days of difficult negotiations, French President Fran,cois Mitterrand launched a historic effort at power-sharing Thursday by formally naming Jacques Chirac as his prime minister. President Mitterrand is a Socialist. Prime Minister Chirac is a conservative neo-Gaullist. Never before in the 28-year history of the Fifth Republic have political adversaries held the two highest offices in France.

The two have worked out an informal compromise enabling them to rule together: Chirac will run domestic policy while Mitterrand presides over foreign policy.

To implement this agreement, Chirac named a pallid government, with nonpolitical figures at top posts. Foreign Affairs went to Jean-Bernard Raimond, France's ambassador to Moscow; defense went to Andre Giraud, a technician and former industry minister; and finance went to Eduard Balladur, a respected administrator and close Chirac adviser.

The new Prime Minister plans to move fast. In his acceptance speech, he announced plans to issue a decree implementing his Reagan-style free-enterprise program, which includes tax cuts, the end of price controls, and at least the partial denationalization of some industries and banks. Chirac also said that proportional representation, introduced last year by the Socialists, would be replaced by the old majority voting system. By using decrees, advisers say, the new government would avoid lengthy parliamentary debates and the chance of defections from Chirac's slim parliamentary majority.

Mitterrand reportedly ceded Chirac these powers only after being assured that foreign and defense policy would be left unchanged. The President and Prime Minister agree on the essentials: modernizing France's independent nuclear force; strengthening the North Atlantic alliance and the European Common Market; and pursuing an interventionist policy in Africa. But they differ on such issues as the United States Strategic Defense Initiative. Chirac supports it. Mitterrand opposes it.

Mitterrand's opinion now seems certain to win out. He rejected Chirac's first choice for foreign minister, Jean Lecanuet, president of the Union for French Democracy, as ``too pro-Atlantist.'' He also rejected Fran,cois Leotard, president of the Republic Party, as choice for defense minister. Second-choices Raimond and Giraud, observers say, are unlikely to get in the President's way.

Troubles still could arise. The new government has a weak political base and Chirac's parliamentary majority of three seats leaves the coalition prone to explosion. While the Prime Minister's own Rally for the Republic Party is tightly disciplined, his allies in the Union of French Democracy are a loose coalition. Satisfying these diverse interests took Chirac two nights of negotiations.

Policy disputes could bring the government down, political analysts say. If a foreign policy crisis were to erupt over the hostages in Lebanon, Chirac may tire of Mitterrand's diplomatic approach and call for action.

Mitterrand is sure to stop any radical moves by Chirac on the home front, these analyst say. The President is on record as opposing Chirac's plans to abolish the wealth tax. He also would oppose full denationalization, and finally, he will probably try to squash any of Chirac's ideas to devalue the franc and institute corporate tax cuts to stimulate export growth.

But for now, Chirac and Mitterrand have strong reasons for wanting their cooperation to work out: They are jockeying for position in the 1988 presidential race. Chirac feels he needs a stint in power to give his aggressive image a statesmanlike tone. His advisers hope the premiership will make him the uncontested conservative leader, overshadowing former President Val'ery Giscard d'Estaing and former Prime Minister Raymond Barre.

Mitterrand needs more time to improve Socialist prospects. His advisers hope the new conservative government, finding no miracle cure for unemployment, will falter in a few months. Then, Mitterrand could use presidential powers to call new legislative elections and restore his Socialist majority. Even if Chirac's government stays in place until 1988, Mitterrand or another Socialist would be well-positioned to win the presidency.

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